Over the lengthy shutdown that the United States just endured, the national debt is presently at $21.974 trillion. This total amount reflects a total increase of 10% over the course of President Donald Trump’s presidency so far, and there’s still more time left. Some experts believe that Bitcoin could be the solution that breaks that bubble open.
Jake Chervinsky recently took to Twitter to quote federal chair Jerome Powell on the debt. The post read,
“I’m very worried about it, but from the Fed’s standpoint… the long-run fiscal non-sustainability of the US federal government isn’t really something that plays into… our policy decisions.’ Buy bitcoin.”
The national debt reflects what the government owes to the creditors that it borrows from, and the debt has continually risen as the government spends far more than what is available to it. During the Obama administration, the debt went from $10 trillion to $20 trillion, which is double.
Over the last six decades, there has not been much progress on the management of the spending of the US government. The process would be simple – spend what is earned and no more. However, the debt has continued to build ever since the Regan administration. The government has stayed in the debt bubble for quite a while, but that does not mean it’s impossible to get out.
Fed Chair Jerome Powell, talking about the $22 trillion US debt:
"I'm very worried about it, but from the Fed's standpoint . . . the long-run fiscal non-sustainability of the US federal government isn't really something that plays into . . . our policy decisions."
— Jake Chervinsky (@jchervinsky) February 1, 2019
Realistically, it is not impossible for the government to print its own money, which is a practice that many nations do anyway.
However, their debts do not really play much of a role because it can fulfill any debt it creates without any change to the standard of living. The Bretton-Woods agreement made the US Dollar the reserve currency of the world. As soon as the demand increased, the US Federal Reserve chose to limit their supply.
Now, this limit has resulted in 1.2 trillion US dollars in circulation, but that does not meet the needs for the overall global trades that happen daily, including oil, gas, coffee, corns, and many other necessary products.
Other countries have managed to hold dollar reserves instead, adding up to $4 trillion in China and $1 trillion in Japan, along with many others who hold similar amounts. Not much has changed overtime except the introduction of the internet. Supporters of Bitcoin have said that digital currency could quickly solve these problems.
The founder of Civic, Vinny Lingham, has stated that the intrinsic value of Bitcoin would ultimately bring more wealth to the economy. He added,
“More wealth will be created in crypto over the next 10 year, than over the prior 10 years. But remember, like any success story, it’s not going to be a straight line up. Keep believing and just be patient.”
Erik Voorhees, founder of Shapeshift, had hoped that the savings of the world would be turned into bitcoin before the next crisis. On Twitter, Voorhees posted,
“When the next global financial crisis occurs, and the world realizes organizations with $20 trillion in debt can't possibly ever pay it back, and thus must print it instead, and thus fiat is doomed… watch what happens to crypto.”
Speaking on cryptocurrencies, namely Bitcoin, Voorhees added,
“they may drop during the early phase liquidity crunch, but ultimately the world would move away from fiat money (printed without end, trending toward zero) toward crypto money (known, transparent, fixed supply, not subject to politicians’ opportunism)>”
However, economists have largely been critical of cryptocurrency in the past, with one of the loudest voices being Nouriel Roubini, calling Bitcoin the biggest scam, following the same sentiment of Warren Buffet. In a recent Yahoo Finance interview, Buffet said,
“If you buy something like bitcoin or some cryptocurrency, you don’t have anything that is producing anything. You’re just hoping the next guy pays more. And you only feel you’ll find the next guy to pay more if he thinks he’s going to find someone that’s going to pay more.”